“We’re not expecting growth to come from any new markets,” says Desjardins Securities analyst Maher Yaghi. “There’s no new sources of revenue at this point, anything they are doing is too small to have any impact.” He expects cable and wireless revenues to increase by low single digits for the foreseeable future. But the technological advantages that once gave it a leg up over its competitors – including a superior network – have largely vanished.
Founder Ted Rogers, who died in 2008, was a larger-than-life visionary. His forceful personality and entrepreneurial drive – along with a lot of borrowed money, used to pay for acquisitions – propelled the company to a long period of growth.
Whoever followed him was going to have a difficult job. The task fell to Mr. Mohamed, a 56-year-old Tanzanian immigrant who had earned a reputation as a smart operator during his time as an executive at Telus Corp. and then Rogers. Everyone knew he could run a business. Nobody was sure if he had his predecessor’s knack for spotting the next wave.
The man himself believes Rogers is already planting the seeds of its next growth phase – even if no one can see it yet.
“I think it is really important that our DNA is understood. We are always looking for the next opportunity,” Mr. Mohamed said in an interview this week. “And sometimes what you find is you don’t get the appreciation until you’ve got enough scale in the business. And that’s fair ball, but nobody should confuse that with not having an opportunity.”
A few of these are new consumer-based services, such as home monitoring, or a subscription service that gives people the ability to watch five hours of sports per month on their smartphones for $5. Mr. Mohamed sees them as a way to distinguish the company from its peers and keep customers hooked, making it harder for them to leave (and more apt to bear the higher-than-inflation annual price increases required to protect profit margins, analysts say).
While some of those opportunities are relatively nascent, Mr. Mohamed says a number of initiatives should start contributing to growth within the next five years. Wireless data is at the heart of most of these efforts, and his vision extends far beyond consumer-based Web surfing, e-mails and apps – or, for that matter, consumers. The future is about machine-to-machine communication, he says, which could include such things as helping companies manage their vehicle fleets or delivery firms figure out the best routes.
Rogers has already signed up major clients such as Hydro-Québec and convenience-store operator Alimentation Couche-Tard Inc. He said it generates about $50-million in revenue, in what he describes as the division’s “startup phase.”
It’s not much for a company that does more than $12-billion in annual sales, but it’s a start.
“Fifty million is small. You don’t see it. But I can assure you ... when we were launching BlackBerry, the first couple of years, we were talking exactly the same way” about the opportunity to gain new wireless revenues, he says. “Fifty million becomes $100-million becomes what is today is clearly in the hundreds of millions for wireless data – $600 million plus for the [first]quarter.”
There are other business lines being developed. One is a mobile payment service, through Rogers Bank. The idea is to have the smartphone’s SIM card double as a mobile wallet that holds everything from virtual credit and debit cards, driver’s licences, transit passes and loyalty points. As owners of the SIM card, Rogers can potentially charge “rent” to store that information.
And while the focus is largely on wireless, Mr. Mohamed knows he can’t turn his back completely on the company’s past. Cable still generates nearly $1-billion of revenue each quarter, despite increased competition from companies such as Bell and Telus. That legacy cable network will continue to evolve, he said, as the company digitizes its signals and offers new services to its customers – such as improving its network so that it can offer better speeds, higher-end services and personal video recorders with more features.
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